Middle East's first green hydrogen-based steel project begins operations in the UAE

The pilot project by Emsteel and Masdar was announced in November and has already started producing green steel

Inauguration of the first green hydrogen-based steel project in Abu Dhabi. Victor Besa / The National

Operations are under way at a new green hydrogen-based steel project in Abu Dhabi, run by Emsteel, formerly known as Emirates Steel Arkan, and Masdar, as part of the UAE’s decarbonisation efforts in hard-to-abate sectors.

The pilot project, the first of its kind in the Mena region, uses green hydrogen instead of natural gas to extract iron from iron ore and has already produced green steel, the companies said on Monday.

It was first announced in November last year, ahead of the UAE’s hosting of the Cop28 climate conference.

Abu Dhabi uses green hydrogen to produce steel

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Officials at the inauguration did not disclose the production capacity or costs associated with the green steel project but described it as the “first step” in scaling up the UAE’s green steel production.

“This is a pilot project, so it's not like we can go ahead and talk about it [output] now … we're just testing it and seeing how it works,” said Saeed Alghafri, chief executive of Emirates Steel, a part of Emsteel.

The company is in discussions with local players in the UAE to sign offtake agreements and plans to export the low-carbon metal to Europe, Mr Alghafri said.

Saeed Alghafri, chief executive of Emirates Steel. Victor Besa / The National

The renewable hydrogen generated by the project has been certified by Avance Labs, the hydrogen code manager accredited by the International Tracking Standard Foundation. Bureau Veritas, serving as the third-party assurance provider, validated the certification data.

“Steel is the backbone of the modern economy. It supports infrastructure, drives the nation, and shapes our industrial landscape,” Saeed Al Remeithi, group chief executive of Emsteel said in a keynote speech.

“However, the [steel sector] accounts for 8 per cent of global greenhouse gas emissions [worldwide], a challenge we must address today,” he said.

Emsteel, which is majority-owned by Abu Dhabi holding company ADQ, has a total annual production capacity of 3.5 million tonnes of steel and 4.6 million tonnes of cement.

The Emirates’ hydrogen ambitions include becoming one of the top 10 producers of green hydrogen by 2031 and reaching a production target of 1.4 million tonnes a year.

“Decarbonising the [steel] sector is critical if we are to meet global climate targets and continue to drive the energy transition forward,” said Mohamed Al Ramahi, chief executive of Masdar.

“By utilising green hydrogen to decarbonise steel production, we have demonstrated not only the visibility of green steel production, but also the potential it holds in transforming the entire steel value chain,” he said.

The EU, the world’s largest steel importer, will fully implement a comprehensive carbon tariff system, known as the Carbon Border Adjustment Mechanism (CBAM), in 2026. CBAM, which seeks to protect European companies that pay for their emissions under the EU's trading system from unfair competition, will impose a carbon price on certain goods imported into the bloc.

Experts say it may give a competitive advantage to producers of low-carbon metals.

“Even in Europe today, demand [for green steel] is not really mature. What is really important today is not the demand, but the awareness,” Mr Alghafri said.

Last year, the EU imported 37.3 million tonnes of steel, an 8.7 per cent increase over the previous year, according to the International Trade Administration.

One of the main challenges to producing green steel is the significantly higher cost compared to traditional methods.

“The cost itself is a challenge, and it's not like something we can brag about. But again, if you want to be first and specifically in a [new] technology, that comes with a high cost,” said Mr Alghafri.

“This is not just an Emsteel agenda, it's a master agenda. It's the collective effort of the government, the regulators, and even the technology providers,” he added.